My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 4 of a series that addresses the most common questions I get from buyers. 

Do I have to get a home inspection?

While not required by law, a home inspection is something I recommend.  A home inspector can perform an objective visual assessment of the property to identify future maintenance issues with key components of your property such as electrical, plumbing, heating and even potential water problems.  This is also a great way for buyers to learn what types of maintenance costs they can expect over the short term.

What is the cost of a home inspection?

Budget about $400 to $500 for the inspection of a standard property such as a townhouse, half-duplex or single family home.  Expect additional costs if the property has more than one dwelling (e.g. a single family home with a basement suite).

How do I arrange a home inspection?

You may find your own home inspector, or ask your REALTOR® for a list of reputable inspectors.

Can I be at the house while the home inspection is going on?

Absolutely!  I recommend that my clients be present for at least the last hour of the home inspection.  This gives you the opportunity to review the results of the inspection with the inspector and ask any questions.  Most home inspections take 2 to 3 hours to complete, and are usually scheduled for the morning or early afternoon.

When do I pay for the home inspection?

Payment is due immediately after the inspection.  Most home inspectors accept cash, cheque or credit card.

For more information on this topic within my website:

• Read my blog article “Should I Get a Home Inspected Before Purchasing It?” posted June,  2010.
• In my Sellers Guide:  How to Pass Your Home Inspection.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.

My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 3 of a series that addresses the most common questions I get from buyers.

How much do I offer?

This really depends.  Five factors to be considered include:

• what the current asking price of the property is and how well it is priced
• if there are other offers competing with your offer to purchase the property
• how important the property is to you
• whether the market is a buyer’s market or a seller’s market
• how long the property has been on the market

This is where the expertise and honesty of your REALTOR® comes in.  You must trust your REALTOR® and feel confident that he or she is providing reliable information.  As part of the services I provide to my clients, we assess the asking price based on comparable sold properties for the area.

Although every REALTOR® will have his or her own negotiating style, there are a few general concepts you should understand:

• An offer is a combination of these things: Price; Conditions (financing, inspection, etc.); Chattels (unattached goods); Possession date. This combination has value to both the buyer and the seller.
• There is no magical percentage for offers. For instance, not every offer should be 5 to 10% below the asking price. Some may be less and some may be more; it depends on how reasonable the asking price is.
• Not every seller HAS to sell his home. Some sellers will be more motivated than others. There are sellers who list their property just to see how much they can get for it, and they may not be willing to negotiate much lower than their asking price. There are other sellers who have to sell, and these may be more willing to negotiate the price.
• Be prepared to walk away. It is important to decide ahead of time the highest price you are willing to pay for the property, and then be prepared to say no to anything higher.
• Competing offers require a much different strategy. You will need the advice and experience of your REALTOR® to know how to handle this type of situation.

If my offer is too low, can my offer insult a seller?

In my opinion, yes, it can.  If your offer is too low, a seller may decide that he or she will not even counter your offer.  I do not recommend a low offer if you really want the property.  You do not want to push a seller’s insult button, because then you risk attaching emotion to the transaction.  If you insult a seller, you risk that person refusing to sell you the home at any price.  If you decide to drastically change your offer, the seller could interpret this as desperation and you could end up paying more for the property than if your offer had been more reasonable the first time.

What if I don’t find anything I like in my price range?  Should I look at houses over my price range in case there is a reduction in the price?

Normally, I suggest that it is reasonable to look at homes that are $5000 to $10,000 over your price range, but not more than this.  You will be very disappointed if you find a house that is more than you can afford, and the sellers will not budge on price!  For example, if you are approved up to $350,000, and you are looking at houses in the $365,000 price range, it could be that the houses at $365,000 have already had $30,000 in price reductions.  It could then be difficult to negotiate the price down to $350,000.  My suggestion to my clients is that we assess these properties on a case by case basis.

If I find a house I like, how do I make an offer?

This is where the expertise and experience of a REALTOR® is required.  You can expect to spend approximately one hour getting the paperwork together and signing the “Offer to Purchase”.  Once your offer is made, your REALTOR® will normally present your offer to the seller and the seller’s REALTOR®.  Negotiation typically begins here.  It is important that you are available by telephone or in person in the event a counter offer is made from your offer.  Once the offer is accepted by the seller, any changes to the contract must be initialed by all parties.  All offers must be accepted IN WRITING to be legally binding.

What happens after my offer has been accepted?

Assuming you have placed conditions on your offer, you will have timelines to fulfill these conditions before the property is sold.  The type of condition will determine what is required.  Remember:  conditions must be removed in writing prior to the expiry of the timelines, or you risk losing the property.  Here are some general conditions:

• Financing condition: Your mortgage broker or bank will need to have the information for your purchase immediately! As a service to my clients, I can fax a copy of the offer, along with a copy of the MLS® listing, to your mortgage broker or bank on your behalf.
• Home Inspection: A property inspection will need to be booked if a certified home inspector is going to be used. The buyer’s REALTOR® will attend the home inspection.

What are conditions in an offer?

Conditions allow for a set amount of time for the buyer to get things in order.  Conditions also ensure that the buyer’s deposit is protected.  If you cannot fulfill your conditions (for example, your bank will not provide you with financing), then your deposit will be returned to you.

What are some of the standard conditions?

• Financing Condition: This gives time for the buyer’s mortgage broker to confirm that the lender will provide funds for the purchase.
• Property Inspection Condition: This gives time for the buyers to have an inspector review the property.
• Condo Document Review Condition: This ensures the buyers receive the condo documents from the seller and gives time for the buyers to read through these documents and seek specialized advice if needed.
• Sale of a Buyer’s Home Condition: This allows the buyers time to sell their current property.

How much time do I get to deal with conditions and finalize the offer to purchase?

Typically, you will have 5 to 7 business days to get your finances in order (so make sure you are pre-approved with a lender BEFORE you write an offer!), have a property inspection completed, or review condo documents.

Is there more paperwork after I make the offer?

Usually there is.  If you placed conditions on your offer, you will have to remove those conditions once you have fulfilled them by signing a “Condition Removal” form.  If you have a variety of condition dates, then you may have to sign several condition removals.  Amendments to the contract may be needed as well, such as a change to the possession date agreed upon by the seller and the buyer.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.

My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 2 of a series that addresses the most common questions I get from buyers. 

How much of a deposit do I have to give when I make an offer?

This depends on the type of property you are purchasing and how you are purchasing it.  For instance, if you are purchasing a property between $200,000 and $300,000, I recommend a deposit of $3000 to $5000.  The larger the purchase price of the property, the more the deposit should be.  For purchases over $400,000, I would recommend a minimum deposit of $5000.  The deposit may also be an item that the seller wants to negotiate.  The seller may expect a larger deposit to ensure your commitment to the purchase.

When is the deposit payable?

The deposit is submitted with any offer and payable immediately after your offer is accepted by both parties.  The deposit is given to the real estate company that has listed the property and is placed in a trust account until you take possession.  The deposit forms part of your total down payment.

Can I lose my deposit?

Generally speaking, the only time you can lose your deposit is if you remove conditions on your offer and do not take possession of the property as agreed in your contract.  BUT:  you should discuss this with your REALTOR®.  If you cannot fulfill the conditions in the contract (for example, you are not approved for financing), your deposit will be returned to you, provided your financial institution will supply upon request a letter to the sellers and their REALTOR®, stating you are not approved for financing.

When is my down payment due?

Your total down payment (usually by certified cheque or bank draft) is not due until you see the lawyer to sign all of the paperwork.  This typically happens a week or two before possession day.  The only money that is payable when you write the offer is the deposit.  This deposit becomes part of the total down payment.  Your lawyer will advise you of the total amount to bring with you when you sign the papers; this amount usually includes lawyer fees and disbursements.

How much money will I need for other costs besides my down payment if I purchase a property?

At minimum, I recommend that you budget $3000 to $5000 for basic items such as:

• lawyer fees and disbursements which will cost between $1000 to $1500. (Disbursements are recoverable expenses the lawyer pays on your behalf.)
• property tax adjustments (cost will be a proportion of the annual taxes, depending on when in the year you take possession)
• home inspection (about $400-$500)
• title insurance (about $250), if required.

There could be other costs associated with your purchase depending on your situation.  The costs listed above are general expenses that most buyers will incur.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.

My clients in Spruce Grove, Stony Plain, Parkland County and the Edmonton area have lots of questions, and I’m happy to answer them!  This article is Part 1 of a series that addresses the most common questions I get from home buyers.

How do REALTORS® get paid?

REALTORS® work on commission, a percentage of the selling price of a property.  This commission is specified in the Listing Contract signed by the seller and the REALTOR® who lists the property.  When a property is sold, the REALTOR® who listed the property for the seller shares the commission with the REALTOR® who sells the property to the buyer.  The buyer is usually not required to pay a commission directly (unless the buyer is under contract; ask your REALTOR® if you are not sure).

When should I start actually looking at homes with a REALTOR®?

As soon as you are pre-approved by your bank or a mortgage broker, you can begin looking at homes.  I would not recommend looking at homes prior to getting pre-approved because you may find something you fall in love with and then find out you do not qualify to purchase it! 

Do I have to call the REALTOR® who has the house listed to view the house?

No.  In Alberta, any REALTOR® can show you any house that is listed on MLS®.  If you have chosen to work with a REALTOR®, your REALTOR® would prefer to show you the property rather than you calling the REALTOR® who listed the home.  Remember, REALTORS® are paid based on a commission so if you are working with multiple REALTORS®, the only REALTOR® who may get paid is the one who writes the offer with you.  If you are looking for a REALTOR®’s full attention, you need to show you can be loyal. 

How do I choose a REALTOR® to work with?

Choosing a REALTOR® can be a difficult task.  REALTORs®, like people in any profession, are not all created equal!  Here are a few tips for picking a REALTOR®:

• Think about what you are looking for in a REALTOR®. Personality is a large part of this profession so think about what type of personality you are compatible with.
• Ask friends or family if they can recommend a REALTOR® to you. If not, start searching on the Internet or in the newspaper.
• Look through websites and see if there are testimonials posted. Do the testimonials give you an indication of the type of personality the REALTOR® has, and is this a fit for you?
• Interview more than one REALTOR® to get a feel for what different people have to offer.
• Find out if the REALTOR® is part-time or full-time and how often you will be able to get in touch with him or her.
• Find out what types of technology the REALTOR® uses: Internet, email, text messaging, social media, etc.
• Send an email to the REALTOR® and see how long it takes for that person to respond. This could be an indication of how attentive the REALTOR® will be to you.
• Ask how many clients the REALTOR® works with at one time. More can be less in this business. Do you feel the REALTOR® will have enough time for you?
• You want a REALTOR® who is client focused. That is, YOU need to be more important than the commission the REALTOR® will earn. The REALTOR® will earn his or her commission after all your needs have been met.

If you don’t see your question here, it might be answered in the Buyers Guide section of my website.  Or, feel free to contact me any time by email at barry@barryt.ca or by phone 780-910-9669.

Whether in Spruce Grove, Stony Plain, Parkland County, the Edmonton area or elsewhere, REALTORS® love statistics.  We like to know how many and what kind of properties are being listed and sold, and for how much.  We also like to examine trends over time because this helps us help our clients determine realistic property values when they buy or sell a home.

We often hear about the ups and downs of the real estate market, but what does this really mean?  Is real estate a good investment?  Does real estate always appreciate? 

Answers to these questions can be seen fairly easily by looking at a few statistics, especially when these are presented in graphic format.   If we look at the average residential selling prices for homes in the Edmonton area from 1962 to 2009, we’ll see some interesting trends.  Even more interesting is that these trends tend to repeat themselves.

From 1962 to 2009 the average selling price of a residence in Edmonton increased from $12,556 to $320,392 – an increase over 47 years of 24 times the starting value!  Does this mean that the value of one’s home doubles every few years?!  Well, sort of…  Examining the numbers year by year, we see that while the overall price trend has been ever higher, the movement is not always steady and not always upward.  There were a number of times during those 47 years when the average selling price in one year, or even for a series of years, was lower than the previous year.

Prices stumbled in 1964, recovering the next year.  Steady, and in some cases significant growth, continued until 1981.  Looking more closely at the gains during those 16 years, and doing a little math, we discover that double digit percentage gains over the previous year occurred in 1967 (12.3%), 1968 (12.9%) and 1969 (17.7%).  During the next 3 years prices continued to increase but at a more modest rate.  1973 saw prices take another leap (14.6%), and that was followed by 3 more years of huge year over year gains (1974 – 28.2%; 1975 – 26.4%; 1976 – 32%).  A house that sold in 1972 for $24,777 was suddenly “worth” $59,450 only 4 years later.  By 1981 the average selling price had risen to $91,438, a gain of 369% in just 9 years.  Many people buying and then re-selling property during this time made substantial financial gains.

But the sometimes cruel nature of the real estate market took over in 1981.  A person buying a home in 1981 would have seen prices drop for the next 4 years, and then increase modestly for another 4 years but still not rebound to the price paid in 1981.  A hard lesson perhaps.

By 1990 the average residence sold in Edmonton for $101,014.  Prices rose for 5 years, fell in 1995 and 1996, and then rose for the next 11 years, up to 2007.  This is eerily reminiscent of the trend mentioned above starting in 1964.  Several of the 11 years between 1997 and 2007 saw a price gain that was dramatic.  In 2002 and 2003 percentage increases were 12.6% and 10.2% respectively.  In 2006 prices rose 29.4%.  This was followed in 2007 by the largest one-year percentage increase since these statistics began:  34.7%, or a rise to a dollar value of $338,009.  Most people are probably aware of what happened to the housing market in the US during this period of time and its effect on house prices throughout North America.  The average selling price of a home in Edmonton dropped 1.5% in 2008 and 3.7% in 2009 but appears to be trending upward so far in 2010.

These trends are even easier to spot in a chart like this one:

Looking at the proverbial big picture, we see the following:

• The average annual price increase is roughly 7.8%
• The average 5-year price increase is about 49%
• Only 9 years between 1962 and 2009 showed price decreases
• If you held a property for 9 years, you would always see an increase
• Edmonton values appear to double every 9 years, on average, since 1962

Statistics and facts suggest that yes, real estate is definitely a good investment, and yes, it does appreciate over time.  

What about right now in the marketplace?  Are we once again in the trend of a couple years of soft prices followed by a decade of increases?  Are prices going to continue to fall before they recover as they did in the 1980s and 1990s?  Is now a good or bad time to buy and sell?  Hard to predict and impossible to know.  This is, of course, exactly what makes real estate interesting!

Interested in learning more about the real estate market in Spruce Grove, Stony Plain, Parkland County or the Edmonton area?  Phone me at 780-910-9669, email me at barry@barryt.ca, or contact me here.